2021 Hero Surprise Billing IDR Health Care Cost

A balanced and predictable process for resolving surprise bills reduces consumer costs and supports a well-functioning market

Patients need to be able to receive the care they need, when they need it, without fear of an unexpected or costly surprise bill. The Blue Cross Blue Shield Association (BCBSA) and Blue Cross and Blue Shield companies across the country strongly believe that no one should receive a surprise medical bill, especially when a patient has done all they can to receive care in-network.

The No Surprises Act, signed into law in December 2020, protects consumers from unfair and costly surprise bills by taking consumers out of the middle when there is a dispute about out-of-network charges or balance bills. Beginning Jan. 1, 2022, the law prohibits balance billing patients who receive unexpected out-of-network care, including air ambulance services. As a result, patients in emergency situations and certain non-emergency situations who aren’t able to choose an in-network provider will only be responsible for in-network out-of-pocket costs.  

Insurers and clinicians will negotiate to settle out-of-network charges. If they can’t agree, a new, independent dispute resolution (IDR) process—or arbitration—can be used. The most recent Interim Final Rule establishes a federal IDR process to fairly resolve payment disputes. This process, along with the other federal rulemaking, will allow the law to be implemented in a way that protects patients, prevents abuse and misuse and reduces the potential for cost escalations over time.

BCBSA shares Congress' goals of protecting consumers and reducing costs as envisioned in the No Surprises Act and commend the administration for implementing the requirements consistent with Congressional intent.

Using the QPA methodology to determine the IDR process

The IDR process relies on the qualifying payment amount (QPA)—an insurer’s historical median in-network rate for similar services in a geographic area—as the primary consideration for payment the process as Congress envisioned. This emphasis makes the IDR process clear, predictable and protects against incentivizing overuse or undermining health insurers’ ability to build robust provider networks and promote patient access to care. It will also likely reduce out-of-pocket expenses for patients and decrease overall health care spending. Using this model, the Congressional Budget Office estimates private health plan premiums could be reduced between 0.5-1 percent and the federal deficit reduced by $17 billion over 10 years. Alternate models actually increase the federal deficit.

In fact, states with more expansive IDR processes not relying on the QPA value saw payments that were inflated and far exceeded the median in-network prices, leading to significant cost increases for consumers as well as increased premiums for employers. The focus on the QPA as a key arbitration factor is critical to controlling costs.

Prioritizing the QPA can help minimize the use of the IDR process and create an environment that can function closer to a true market, ensuring the best access to care for patients at the lowest possible cost. Limiting the use of IDR will help contain the associated administrative costs, reducing downstream costs for consumers. Reliance on the QPA will help reduce prices that were previously inflated due to surprise billing, ultimately helping to improve access to affordable, in-network care.

How is the QPA determined?

As intended by Congress, the QPA is calculated using a methodology developed by federal regulators which uses prevalent market prices, accurately reflecting the various factors impacting reimbursement. The QPA is based on current and common contracted rates negotiated between in-network providers and health plans, and also leverages reimbursement rates paid in same geographic region for same specialty, items and services. This includes special accounting for circumstances and needs specific to rural communities. The reliance on in-network rates ensures fair reimbursement and reduces incentives for clinicians to remain out-of-network.

No intent to establish a benchmark payment

The administration is clear the use of the QPA is not to create an initial payment amount or establish a benchmark payment, providing clear direction that for circumstances where the entities engaged in the IDR believe the QPA is not the appropriate consideration they can demonstrate the value of the item or service is substantially different from the appropriate out-of-network rate. The regulations are explicit that the IDR process, especially the reliance on the QPA, is designed to encourage both parties to reach a reimbursement agreement during the 30-day negotiation period established in the No Surprises Act.

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